O'Malley may try for sales tax increase to fund roads, transit

Michael Dresser and Annie Linskey, The Baltimore Sun

Gov. Martin O'Malley says he still hopes to convince the legislature to raise money for highway and transit projects — possibly by adding another penny to Maryland's six-percent sales tax and dedicating the extra revenue to transportation.

In an interview with The Baltimore Sun, O'Malley conceded that his initial proposal to apply the sales tax to gasoline is dead in the General Assembly. But he said an alternative would be a delayed implementation of that proposal, with the sales tax not being applied until gas prices fell to a certain level.

A second option, he said, would be to raise the general sales tax — which he pointedly called the "ninth-lowest sales tax in the country" — to seven percent and earmark the additional revenue to highway and transit projects. The governor said he hoped legislators would consider the options after they have completed work on the state budget and other tax issues.

"I think there might be a small window after the budget passes when we can take a deep breath and revisit the options before us," O'Malley said.

He acknowledged that his original transportation tax plan won't fly, saying "the word gas combined with tax" is anathema to many people. But he said he also believes many Marylanders realize the state needs to do more to take care of its road and transit needs. "There's a growing public understanding that this is a real problem," he said.

Transportation advocates and influential business organizations have been warning that Maryland is running seriously short of funding for much-needed transportation projects. Last year, a blue-ribbon commission recommended that the state raise an additional $875 million in transportation revenue each year.

The commission proposed a 15-cent increase in the state's 23.5-cents-a-gallon gas tax, which has not been raised since 1992, phased in over three years. O'Malley submitted a variation of that plan, which would apply the state's sales tax to gasoline over three years. When fully implemented, that would raise an estimated $613 million a year. But lawmakers, already weary of proposals to increase income taxes to balance the budget, have shown little enthusiasm for the O'Malley gas-tax measure.

Senate President Thomas V. Mike Miller said Tuesday that he was not sure the budget would be wrapped up in time to allow consideration of the governor's alternative transportation-funding proposals before the annual 90-day session ends Monday night. House Speaker Michael E. Busch could not be reached for comment. All three men are Democrats.

But Sen. J. B. Jennings, a Baltimore County Republican, said it's the wrong time to introduce an entirely new tax scheme. "It's too late to try to go back to the drawing board on something like this," he said.

Regardless of the timing, Jennings said, the sales tax increase is a bad idea. "Now we're taking it up to seven cents? My constituents would be absolutely furious with that," he said.

Advocates of increased infrastructure investment haven't given up their efforts despite the budget logjam and dwindling time. On Wednesday, the Greater Baltimore Committee, the Maryland Chamber of Commerce and other groups plan to hold news conferences in Baltimore and Annapolis at which the national transportation research group TRIP will release a report listing what it calls "The Top 40 Surface Transportation Projects to Support Economic Growth and Quality of Life in Maryland."

In the interview, O'Malley expressed skepticism about legislation making its way through the General Assembly that would add a sixth casino site in Maryland — near the Woodrow Wilson Bridge in Prince George's County.

The governor said he has not been taking an active role in the General Assembly's consideration of expanding gambling, but he expressed misgivings about proposals to add another site now.

"We've had difficulty getting the five we have up and going," he said. Of the five sites authorized in the 2007 plan adopted by the legislature, only two are in operation now — one at Ocean Downs and another in Perryville. A third is expected to open its doors in June at Arundel Mills. Licenses have yet to be awarded for sites in Baltimore and at the Rocky Gap resort in Western Maryland.

O'Malley said talk of a sixth site raises concerns about market saturation — a worry that several House delegates stressed during a hearing on the measure Tuesday. The Senate-passed bill would increase the number of slot machines in the state by about a third.

"I wonder how many locations our state can support," O'Malley said. "I had thought and hoped I was done with this issue."

Should the bill pass in the House, only some provisions could be vetoed by the governor. According to the attorney general's office, provisions that would allow table games and permit a sixth casino site could be vetoed. A provision that would make expansion to Prince George's County contingent on a referendum by county voters takes the form of a constitutional amendment and could not be vetoed.

Overall, O'Malley expressed satisfaction with a "very productive" session during which he has already scored some high-profile victories — notably the passage of a bill legalizing same-sex marriage — and is on the verge of racking up several more. The same-sex marriage bill is expected to be petitioned to a referendum in November, and the governor said he would take an active role in the campaign to win voter approval of the law. But O'Malley said he would carefully pick his shots in making his arguments.

"For some groups, I'll be an effective spokesman. For some groups, I won't be," he said.